Hungarian gov’t offers huge incentives for families to have more kids

February 12, 2019 (Population Research Institute) — In his annual State of the Nation address this past Sunday, Hungary’s Prime Minister Viktor Orban announced his proposed “Family Protection Action Plan,” a package of policies aimed at encouraging couples to marry and have children. Lots of children.

A key element of Orban’s plan would exempt women with four or more children from the income tax. His plan also offers women under 40 who are getting married for the first time special low-interest government loans of up to 10 million Hungarian Forints ($35,606 USD).

“Hungarian fertility rates have been below replacement for decades,” says Population Research Institute President Steven Mosher, “And its population has been shrinking since the 1980s. The Orban government hopes to turn this around, and quickly, by rewarding those who are generous in having children. After all, such couples are providing for Hungary’s future in the most fundamental way: by providing the next generation of Hungarians.”

To counter the country’s rapid population decline, the new policy will offer couples with children a number of other benefits. To help couples find family housing, families with two or more children would qualify to receive a 1 million Forint ($3,560 USD) subsidy from the government to help pay off their mortgage, according to the Hungary Journal. Such subsidies were first offered to families with three or more children last year. Now this benefit would be extended to families with only two children as well.

The Family Action Protection Plan would also expand an existing government home loan program available to couples with two or more children who buy a home. The current program that allows couples to buy only a new home will be expanded to allow couples to buy an older home as well.

Other benefits include help with transportation and childcare. Couples raising three or more children will be eligible for a $9,000 grant that can be used to purchase a family car, defined as a vehicle that seats 7 or more people. On the childcare front, Orban vowed to create 21,000 daycare centers across the country over the next three years, as well as promising childcare payments directly to grandparents who were caring for grandchildren.

Hungary’s fertility rate has been below replacement level for a half century or more. According to the U.N. Population Division, fertility in Hungary dropped below the level needed to sustain the current population in the early 1960s, a time when Hungary had the lowest birth rate in the world.[1]

Hungary’s fertility rate briefly rose to slightly above replacement in the late 1970s, but plummeted afterwards. By the beginning of the present century, it had fallen to around 1.3 children per woman of childbearing age.[2] This is among the lowest levels ever recorded for any country.

While Hungary’s fertility rate has risen slightly in recent years, it remains far below replacement. According to EuroStat, Hungary’s total fertility rate was 1.53 in 2016,[3] which is still far below the 2.08 children per woman necessary, according to UNDESA, to reach replacement rate fertility.[4]

Reflecting Hungary’s low fertility rate, the country’s population began to contract around 2007. Since 2007, according to Eurostat, Hungary has lost nearly 290,000 people, even though the country had a small net gain of migrants over that same time period.[5] In 2017 alone, Hungary’s population contracted by 19,000 people.[6]

The number of births in Hungary is on the decline as well, although somewhat unevenly. While the number of births increased in 2012, 2014, and 2016, the intervening years saw declines.[7] The high water mark for births was 2006, when there were nearly 100,000 babies born. No year since has surpassed that number.[8] In 2017, there were 95,361 live births, according to Eurostat, 3,000 fewer than in 2016.[9]

Hungary Prime Minister Viktor Orban has long advocated for policies to boost the country’s fertility as a means to stem population decline and to protect Hungary’s cultural heritage.

While some low-fertility countries in the West have sought to mitigate the effects of population decline with increased immigration, Orban and his Fidesz Party have rejected this as a solution to the nation’s population crisis. He maintains that his goal is to “ensure the survival of the Hungarian nation” and to preserve the small Central European nation’s Christian culture.

“The target countries for migrants are witnessing the emergence of a Christian-Muslim world with a shrinking rate of Christians,” Prime Minister Orban said, “But we, central Europeans, still have a future of our own.”

According to the Prime Minister’s Office, the Hungarian Government plans to pay for the action plan’s subsidies and loans from the government’s reserve funds and surplus revenues.

According to the E.U. Labour Force Survey (EU-LFS), unemployment in Hungary has fallen by more than half over the past decade.[10] While the unemployment rate in 2009 stood at 10%, it was only 4.2% by 2017, almost as low as the U.S. number of 4%.[11]